Should You Declare Academic Bankruptcy?

Learn about academic bankruptcy, its benefits and disadvantages, and whether this option is right for your GPA and financial aid eligibility.

Americans that have made bad financial decisions can begin the process of fixing their poor financial history by declaring bankruptcy. However, for community college students, did you know that a similar process exists for bad grades? A semester riddled with poor grades can be wiped clean with an academic bankruptcy. While an academic bankruptcy will not magically disappear from your records in seven years like a financial bankruptcy does, there are many advantages to undergoing the process. However, there are also some definite negatives to making this decision.

Pros of Academic Bankruptcy

Although academic bankruptcy may sound like a novel term, it may help you raise your community college GPA. When you declare academic bankruptcy, you essentially erase the grades of one entire semester or quarter. If you’ve gotten good grades during your first two semesters in community college, then had one bad semester due to medical, family, or other issues, that one bad semester can completely ruin your GPA. By declaring that one semester bankrupt, the grades that you received will not be calculated as part of your overall GPA. This can be a good strategy for you to repair and boost your cumulative GPA.

If you have lost your financial aid eligibility because of a cumulative GPA that does not meet the minimum requirements, then declaring academic bankruptcy may help you regain your financial aid more expeditiously. However, because policies vary from college to college, you should discuss this situation individually with your community college’s financial aid office before making the decision to declare a semester as academically bankrupt.

Cons of Academic Bankruptcy

While the grades of a particular quarter or semester are erased, your transcript will include a notation that you have declared academic bankruptcy, however, this notation will not explain why the semester was declared bankrupt. In addition, although the grades you earned during that particular semester will not count towards your overall GPA, the work (and earned grades) may still be included on your transcript, depending upon your community college’s policies. In essence, an academic bankruptcy can make your GPA look better by removing a bad semester from GPA calculations, but the grades earned may still be posted to your official transcript. In that regard, an academic bankruptcy is not a means of completely hiding a semester’s poor performance.

If you are planning to transfer to a four-year university, it may be wise to include in your application a supplementary statement discussing the circumstances surrounding your academically bankrupt quarter or semester. For example, if you were in a car accident and spent a month in the hospital, this should be conveyed to the transfer university as a means of explaining why your grades were so low in the bankrupt semester. In addition, keep in mind that not all universities will accept your academic bankruptcy, meaning they may calculate your entire GPA inclusive of the bankrupt semester. In this scenario, for a community college student transferring to a four-year institution, declaring academic bankruptcy may not provide you with many benefits.

Also keep in mind that future employers who review your transcript will also see the notation of academic bankruptcy. Again, be prepared to explain what happened that semester in case potential employers ask.

Of course, for the vast majority of community colleges, all of the classes that you took during the academically bankrupt quarter or semester will not count as credit towards your major or graduation requirements. As a result, you will need to retake these classes in order to earn the course credits. In addition, you cannot academically bankrupt a portion of your semester’s coursework. The entire semester must be declared academically bankrupt. Thus, even if you earned A’s in two of your courses, this performance and its course credits will be wiped from your transcript as well. If you have a mixed bag of grades one semester, with several A’s and several D’s and F’s, you will need to consider whether a bankruptcy is worth losing the grades and credits from the classes in which you received good grades.

Financial Ramifications of Academic Bankruptcy

Students who are receiving financial aid should take extra care when considering an academic bankruptcy. Before you make your decision, it is critical that you first speak with your community college’s financial aid office to determine what the ramifications to your financial aid eligibility will be. The bankruptcy may impact your current or future eligibility, so you run the risk of losing part or all of your award package. For most community colleges, however, the course hours you earned in the bankrupt semester will still be credited towards your minimum requirements of progress and may not negatively impact your financial aid awards.

When Should You Declare Academic Bankruptcy?

Keep in mind that some community colleges only allow students to declare academic bankruptcy once. You should check with your academic counselor to determine your campus’ specific policies.

You should choose your timing wisely regarding your academic bankruptcy declaration. For example, if you experienced abnormal health problems during the semester, you changed major dramatically, or if a family situation caused you unusual duress, then these circumstances may have impacted your usual performance and could be solid grounds for academic bankruptcy. If, however, you are simply a freshman who was adjusting to the community college life and earned a range of grades from A’s to C’s, then you may want to “save” your academic bankruptcy for another point in the future that may be more appropriate for an academic bankruptcy.

In addition, keep in mind that you typically do not need to exhibit haste in wiping an entire semester’s slate clean. For most community colleges, you can declare academic bankruptcy for any semester before you graduate. Others will allow you up to three calendar years since the semester in question to declare bankruptcy. Therefore, before you graduate, you can review your academic performance over the last several years and choose your worst performing semester to bankrupt.

How to File for Academic Bankruptcy

In making the decision to file for academic bankruptcy, it is highly recommended that you first consult with both an academic counselor, as well as a financial aid officer. Making the decision to academically bankrupt a semester is not one to be taken lightly, and the guidance of college personnel is highly recommended.

Once you have made the decision to utilize academic bankruptcy, you will most likely need to file a petition with the Dean’s Office at your community college, although this may vary from campus to campus. The petition will be reviewed for eligibility, and you will be notified regarding the approval or disapproval of your academic bankruptcy.

Every community college outlines its own policies, regulations, and guidelines regarding academic bankruptcy. Meeting with your college counselor is the first step in determining if academic bankruptcy should be a route you choose to take. It is a viable option for students who have had one rough semester and need to improve their GPA. However, there could be negative consequences for students who wish to transfer to a four-year institution that should be taken into consideration. Additionally, academic transcripts will include a notation that a semester has been bankrupted, so be prepared to explain the situation to potential employers.

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